USD/JPY keeps the red near 105.25 region, moves little post-NFP

• USD/JPY came under some renewed selling pressure amid reviving safe-haven demand.
• The global risk sentiment took a hit on news that Trump tested positive for COVID-19.
• Friday’s mixed US monthly jobs report (NFP) did little to provide any meaningful impetus.

The USD/JPY pair trimmed a part of its early losses to 1-1/2-week lows, albeit maintained its offered tone near the 105.25 region following the release of the US monthly jobs report.

The pair witnessed some aggressive selling on the last day of the trading week and finally broke down of a one-week-old trading range amid a strong pickup in demand for the safe-haven Japanese yen. The global risk sentiment took a hit after the US President Donald Trump and the first lady Melania Trump tested positive for COVID-19.

The unexpected news added to the already uncertain environment and triggered a fresh wave of the global risk-aversion trade. which forced investors to take refuge in traditional safe-haven assets. The anti-risk flow was reinforced by a weaker tone surrounding the US Treasury bond yields and exerted pressure on the USD/JPY pair.

On the other hand, the US dollar seesawed between tepid gains/minor losses on the back of the impasse over the next round of the US fiscal stimulus measures. The USD bulls remained on the defensive after the headline NFP showed that the US economy added 661K new jobs in September, much lower than the reading of 850K anticipated.

The disappointment, to a larger extent, was negated by an upward revision of the previous month’s reading to 1.489 million from 1.371 million reported earlier. Adding to this, the unemployment rate fell more than anticipated to 7.9% from 8.4% previous and 8.2% expected. The mixed employment details failed to provide any impetus to the USD/JPY.

It will now be interesting to see if the pair is able to capitalize on the intraday bounce or meets with some fresh supply at higher levels. Nevertheless, the USD/JPY pair still seems poised to end the week on a downbeat note and record a modest weekly loss.

Technical levels to watch